Solar tariffs have fallen so dramatically that tariffs which were at record lows just three months ago no longer appeal to distribution companies, creating a big challenge for renewable energy companies.

In April, French solar developer SolaireDirect won 250 MW in an NTPCBSE 0.52 % conducted auction at Kadapah Solar Park in Andhra Pradesh, quoting a tariff of Rs 3.15 per kwH. At the time, this was a record low, beating the previous record of an average tariff of Rs 3.30 per kwH set . At the time, this was a record low, beating the previous record of an average tariff of Rs 3.30 per kwH set in the auction conducted at Rewa Solar Park in Madhya Pradesh in February.

But with tariffs having dropped even further, reaching an all-time low of Rs 2.44 per kwH at an auction conducted in May by Solar Energy Corporation of India (SECI) at a solar park in Rajasthan, Andhra Pradesh has made it clear to NTPC that it does not want solar power at Rs 3.15 per kwH, a tariff it now believes is too high. NTPC is left with the unenviable task of finding a new buyer.

We have given NTPC permission to find another off-taker,” said Ajay Jain, chairman, New and Renewable Energy Development Corporation of Andhra Pradesh (NREDCAP). “We have said we will waive the transmission charges. There is no immediate requirement for us to take on this power.” NTPC officials refused to discuss the matter. French power giant Engie, which acquired SolaireDirect in 2015, was also unwilling to comment.

Uttar Pradesh has renegotiated the tariff for an auction it conducted in September 2015, despite having already signed the necessary PPAs. Jharkhand has been delaying signing PPAs with the winners of an auction conducted 16 months ago

But Andhra Pradesh does not even want to renegotiate – it is simply not interested any more. Andhra Pradesh added maximum amount of solar installed capacity among states in 2016-17, a sizeable 1,294.26 MW, achieving a cumulative installation of 1,867 MW by end March.